Credit Suisse expects write-down of approximately CHF 2.3 billion in 4Q17 due to US tax reforms
Tax reforms expected to have a positive impact on the US economy and our activity levels in the US
New tax on services and interest payments to affiliates outside US to likely have a negative impact on Credit Suisse US tax liabilities in 2018
Further detail on impact of US tax reform to be provided with announcement of full-year 2017 results in February
Credit Suisse expects to write down the value of its deferred tax assets (DTAs) in the US by approximately CHF 2.3 billion in 4Q17, following the enactment of the US Tax Cuts and Jobs Act today.
The write-down is a one-time accounting adjustment and has a minimal impact on Credit Suisse’s strong regulatory capital position. The bank reported a look-through CET1 ratio of 13.2% at the end of 3Q17 and intends to operate at a ratio of more than 12.5% from 2018 to 2020, before the implementation of the Basel III reforms beginning in 2020. The policy for returning capital to shareholders announced at the Investor Day is unchanged.
Credit Suisse anticipates that the reforms will have a positive impact on the US economy and our activity levels in the US, in particular with regard to our investment banking activities in advisory and underwriting.
With regard to the immediate impact on Credit Suisse’s effective tax rate, it should be noted that the US reforms introduce a new tax on services and interest payments to affiliated companies outside the US. Credit Suisse is likely to be affected by this measure in 2018, increasing our US corporate tax liability. The accounting effects of this new measure - the base erosion and anti-abuse tax (BEAT) - may be subject to revision depending on any guidance received from US authorities and standard setting bodies.
Further detail on the implications of the tax reform for Credit Suisse will be provided when the fourth-quarter and full-year 2017 results are published on February 14, 2018.